EUROPEAN COMMODITIES UPDATE: Crude trims losses but metals see broader pressure from the Buck

Analysis details (10:50)

WTI and Brent front-month futures have been trimming overnight losses despite the firmer Dollar, the increasingly risk-averse mood, and a larger-than-expected build in private inventories, whilst the clock ticks down to next week’s OPEC+ meeting. The gains across the complex also come amid further geopolitical updates whereby the Ukrainian regions that took part in the referendum to join Russia submit formal appeals to join Russian territory, whilst the Nord Stream 1 sabotage investigation is ongoing. Add to that, North Korea fired a ballistic off the East Coast as US VP Harris visits Japan and South Korea. Elsewhere, Brussels is gearing up to discuss broader gas price caps alongside a Russian oil cap and further sanctions (Newsquawk analysis available here). On the oil cap, the mechanics of a Russian oil cap will see shipping and insurance firms banned from dealing with Russian oil if the price is higher than what is currently being sold in Asia (~30% discount vs Europe). Brussels and Washington hope to have the price-capping mechanism for Russian oil exports in place by December 5th. According to Politico, under the deal, “the EU will soften its sanctions on other products, effectively removing the shipping ban on Russian fertilizers, cement and other products. WTI Nov trades back above USD 78/bbl (vs low 76.55/bbl), whilst Brent Nov topped USD 86/bbl (vs low 84.26/bbl). Over to metals, the broader complex is pressured by the firmer Dollar. Spot gold inches closer towards USD 1,600/oz on the downside, whilst LME futures are softer across the board, with 3M copper briefly dipping under USD 7,250/t this morning.

28 Sep 2022 - 10:50- Research Sheet- Source: Newsquawk